Mortgage Applications were -10.1% for the week ending August 16th, a steep decline from the previous +16.8%. Weekly mortgage applications are a volatile indicator with wide swings not that uncommon. Applications have recently ranged between a ~10% gain to an ~8% decline and have averaged +1.5 in the post-Covid era. Fixed 30-year mortgage rates declined from 6.97% to 6.93% over the same August 16th period, not enough to entice buyers.
Initial Jobless Claims were 232k for the week ending August 17th, matching the 232k estimate.
The Bureau of Labor Statistics, an agency of the U.S. Department of Labor, released its annual nonfarm payrolls revision yesterday. The BLS said actual job growth through March of this year was 818k less than the 2.9 million originally reported, an almost 30% downward revision and the largest payroll revision since 2009. Estimates of the revision were -500k on the high side so the -818k print took markets by surprise.
Underlying weakness in labor supports expectations for a rate cut at the FOMC’s next policy meeting on September 18th. The implied probability of a quarter point cut is solidly above 100% at each of the next five policy meetings, and the overnight rate is expected to reach 3.0% by June of 2026 (from the current 5.329%.
The dollar is higher today, its first positive reading after four consecutive daily losses. The dollar index is +0.24% at 101.283. U.S. Treasury yields are marginally higher in all tenors, 2-year leading with 0.058%.
The dollar’s biggest weekly gain is +4.35% vs. the Mexican peso. The peso’s decline (-19.72% vs. the USD since early April) began around the time of Mexico’s general election and has gained momentum with the unwinding of the carry trade, a dimming economic outlook for the U.S., and uncertainty over the U.S. general election in November.
Tomorrow Fed Chairman Powell will deliver the keynote address at the Fed’s annual symposium in Jackson Hole. This is the main economic event of the week and could prove to be pivotal if Powell is uncharacteristically clear about the FOMC’s near-term rate path.
